Harmonic Announces Third Quarter 2009 Results

Wednesday, October 28, 2009

Sequential Revenue Growth in International Markets; Extending Technology Leadership

Harmonic Inc. (NASDAQ: HLIT), a leading provider of broadcast and on-demand video delivery solutions, today announced its preliminary and unaudited results for the quarter ended October 2, 2009.

For the third quarter of 2009, the Company reported net sales of $83.9 million, compared to $91.5 million in the third quarter of 2008 and $81.3 million for the second quarter of 2009. For the first nine months of 2009, net sales were $232.9 million, compared to $268.1 million in the same period of 2008.

During the third quarter of 2009, the Company saw a sequential increase in quarterly sales to international customers, particularly in Europe. International sales represented 52% of revenue for the third quarter of 2009, up from 43% in the previous quarter and 39% in the third quarter of 2008. Total bookings for the third quarter were approximately $79.9 million, compared to $81.3 million in the previous quarter.

The Company reported GAAP net income for the third quarter of 2009 of $2.6 million, or $0.03 per diluted share, compared to net income of $12.0 million, or $0.12 per diluted share, for the same period of 2008. Excluding restructuring charges related to the recent Scopus acquisition and non-cash accounting charges for purchase accounting adjustments to inventory, stock-based compensation expense, the amortization of intangibles and certain tax adjustments, the non-GAAP net income for the third quarter of 2009 was $4.5 million, or $0.05 per diluted share, compared to $15.9 million, or $0.17 per diluted share, for the same period of 2008. See “Use of Non-GAAP Financial Measures” and “GAAP to non-GAAP Reconciliation” below.

As of October 2, 2009, the Company had cash, cash equivalents and short-term investments of $253.0 million, compared to $252.6 million as of July 3, 2009.

“We’re pleased with the sequential sales growth from our expanding base of international customers,” said Patrick Harshman, President and Chief Executive Officer. “However, we continue to see cautious customer spending compared to last year. In this market environment, we have continued to carefully manage our operating expenses while also continuing to extend our global reach and technology leadership across a range of compelling new video applications extending from HDTV to mobile video. We remain confident in our strong competitive position and long-term growth prospects.”

Business Outlook

Harmonic anticipates that net sales for the fourth quarter of 2009 will be in a range of $80.0 to $86.0 million. GAAP gross margins and operating expenses are expected to be in a range of 44% to 46% and $37.0 to $38.0 million, respectively. Non-GAAP gross margins and operating expenses for the fourth quarter of 2009, which exclude charges for stock-based compensation and the amortization of intangibles, are anticipated to be in a range of 47% to 49% and $33.0 to $34.0 million, respectively.

Conference Call Information

Harmonic will host a conference call today to discuss its financial results at 2:00 P.M. Pacific (5:00 P.M. Eastern). A broadcast of the conference call can be accessed on the Company’s website at www.harmonicinc.com or by calling +1.706.634.9047 (conference identification code 32354964). The replay will be available after 6:00 P.M. Pacific at the same website address or by calling +1.706.645.9291 (conference identification code 32354964).

Editor’s Note: Product and company names used herein are trademarks or registered trademarks of their respective owners.

 

About Harmonic

Harmonic Inc. is redefining video delivery with the industry’s most powerful solutions for delivering live and on-demand video to TVs, PCs and mobile devices. Harmonic’s 20 years of technical innovation and market leadership enable the company to offer a unique and comprehensive solution portfolio—including encoding, transcoding, content preparation, stream processing, asset management, edge processing, and delivery. Broadcast, cable, Internet, mobile, satellite and telecom service providers around the world choose Harmonic’s IP-based digital video, software, and broadband edge and access solutions. Using these award-winning and industry-leading solutions, operators can reduce costs and differentiate their services by offering consumers a higher quality, personalized multi-screen experience.

Harmonic (NASDAQ: HLIT) is headquartered in Sunnyvale, California with R&D, sales and system integration centers worldwide. The company’s customers, including many of the world’s largest communications providers, deliver services in virtually every country. Visit www.harmonicinc.com for more information.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements related to: our expectations regarding our final results for the third quarter ended October 2, 2009; our belief that we are continuing to extend our global reach and technology leadership across a range of compelling new video applications; our confidence in our competitive position and long-term growth prospects, and our expectations regarding net sales, GAAP gross margins, GAAP operating expenses, non-GAAP gross margins and non-GAAP operating expenses for the fourth quarter of 2009. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the possibility that the trends toward more high-definition, on-demand and anytime, anywhere video will not continue to develop at its current pace, or at all; the possibility that the continuing integration of Scopus does not proceed as we expect; the possibility that our products will not generate sales that are commensurate with our expectations; the mix of products sold and the effect it has on gross margins; delays or decreases in capital spending in the cable, satellite and telco industries; customer concentration and consolidation; general economic conditions, including the impact of recent turmoil in the global financial markets; market acceptance of new or existing Harmonic products; losses of one or more key customers; risks associated with Harmonic’s international operations; inventory management; the effect of competition; difficulties associated with rapid technological changes in Harmonic’s markets; the need to introduce new and enhanced products and the risk that our product development is not timely or does not result in expected benefits or market acceptance; risks associated with a cyclical and unpredictable sales cycle; and risks that our international sales and support center will not provide the operational or tax benefits that we anticipate or that expenses exceed our plans. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Harmonic’s filings with the Securities and Exchange Commission, including our annual report filed on Form 10-K for the year ended December 31, 2008, our quarterly report on Form 10-Q for the quarter ended July 3, 2009 and our current reports on Form 8-K. The forward-looking statements in this press release are based on information available to the Company as of the date hereof, and Harmonic disclaims any obligation to update any forward-looking statements.